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United States v. Egemonye, 62 F.3d 425, 1st Cir. (1995)
United States v. Egemonye, 62 F.3d 425, 1st Cir. (1995)
3d 425
Because there was no trial, we derive the facts primarily from the recitations at
the plea hearing, from the presentence report, and from submissions at the
sentencing hearing. United States v. Connell, 960 F.2d 191, 192-93 (1st
Cir.1992). The case arose out of a sting operation conducted by a joint federalstate task force investigating credit card and other financial fraud in
Massachusetts. The critical events took place in January and February 1993.
Egemonye purchased four more credit cards from Kathy on January 29, 1993,
and four more on February 2, 1993. The aggregate limits on the cards in the
two transactions were $21,000 and $14,000, respectively. In between these
transactions, several of the cards were used to obtain advances from banks, and
Egemonye and others in the conspiracy engineered deposits of some stolen
checks into accounts of individual card holders to boost the depleted credit
available for those cards.
Until the fourth transaction, Kathy made the "sales" in exchange for a share of
the proceeds, but on February 5 she proposed that she be paid a flat $200 per
card. Egemonye said, "I'm not going to buy one card for two hundred.... It has
to be like ten." On February 10, Kathy told Egemonye that she expected to
receive a number of cards that day, that Egemonye should bring $2,000 for 10
cards, and that she would "front" (finance) any additional cards and accept
payment for them later. Egemonye agreed, subject to his examination of the
cards.
When Kathy and Egemonye met later that day, Kathy said that she had a bag
full of cards and asked Egemonye whether he knew of another buyer if he did
not want them all. He said, "I probably can handle them," and proceeded to
give Kathy $2,000 down, and a promise of $6,000 more later, for 40 Household
Bank Visa and MasterCard credit cards with an aggregate limit of $200,000.
Egemonye was arrested immediately thereafter, followed by the indictment and
plea already described.
We have recently had occasion to discuss Connell and the other decisions in
this circuit that have addressed sentencing factor manipulation. United States v.
Montoya, 62 F.3d 1 (1st Cir.1995). Summarizing the prior cases, we said that
"where government agents have improperly enlarged the scope or scale of the
crime," the sentencing court has power to exclude "the tainted transaction"
from the guideline computations and for purposes of any mandatory minimum
statute. Montoya, 62 F.3d at 3 (quoting in part Connell, 960 F.2d at 195).
10
11
12
There is some basis for the suggestion that task force agents were unhappy with
Egemonye's prior record and believed, in the words of one of the agents, "that
he [earlier] got off lightly for his criminal activity." That criminal record,
according to the agent just quoted, involved a history of credit card fraud by
Egemonye that could be traced back to 1990 and involved a number of
transactions. On this appeal, the government is prepared to assume arguendo
that the background facts, "viewed collectively, could call the government's
motives into question to some extent."
13
Nonetheless, the government says that multiple sales were clearly appropriate
in order to identify Egemonye's co-conspirators, which they did. As to the final
sale of 40 cards, the government insists that it too "had a valid investigatory
purpose" which was "to explore the parameters of the defendant's criminality."
Egemonye's counsel replies that this "parameters" explanation has no real
substance and could be used to enlarge a defendant's sentence to virtually any
height whatever. We think that Egemonye's reply has some force but overstates
the matter.
14
15
16
The question, then, is whether the fourth transaction is tainted by the agents'
subjective motives. The pallet in such matters contains not blacks and whites
but shades of gray. Motives may be mixed; good and bad motives are often
matters of degree; and there can be multiple actors. Whether to consider
subjective motive at all presents a problem of policy. Compare Harlow v.
Fitzgerald, 457 U.S. 800, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982) (refusing to
do so in the qualified immunity context). Still, we would be greatly concerned
if evidence otherwise available showed that a plainly improper subjective
motive--say, racial hostility or personal animus--had enlarged or prolonged the
sting.
17
But this is not such a case. About the most that can be derived from the record,
drawing all reasonable inferences in favor of Egemonye, is that the agents
thought that Egemonye was an established and unrepentant defrauder who had
escaped serious punishment for a series of past, similar frauds. With this in
mind, they conducted a sting operation that involved no pressure whatever on
Egemonye, lasted for only four transactions, and garnered several other
defendants. The first three transactions involved 11 cards; the last one, 40. This
is a sizeable jump but hardly extraordinary.
18
That agents considered Egemonye's past record in selecting him for overtures
by the task force is a commonplace of law enforcement. Undercover operations
frequently target those who are suspected of crime, and the recent history of
fraudulent activities gave the agents some reason to think that Egemonye was
not only predisposed but actively engaged. Fed.R.Evid. 404(a), restricting
character evidence to show propensity, is a rule for trials and not the conduct of
police investigations.
19
At worst, the agents went too far if and to the extent that they thought
themselves entitled to make up for any shortfall in prior punishments. But the
line is thin and blurred between such a dubious motive and a simple desire to be
sure that a committed criminal is caught and tried for a substantial offense
based on unshakeable evidence. And, as we have already held, Egemonye was
legitimately targeted and the sting objectively reasonable in extent. Under these
circumstances, even assuming that the agents' motives were mixed and not of
crystalline purity, we see nothing that would require a curtailment of the
sentence.
20
21
Consistent
with the provisions of Sec. 2X1.1 (Attempt, Solicitation or Conspiracy),
if an intended loss that the defendant was attempting to inflict can be determined,
this figure will be used if it is greater than the actual loss.... For example, if the fraud
consisted of selling or attempting to sell $40,000 in worthless securities.... the loss
would be $40,000.
22
In accord with the presentence report, the district court in this case attributed to
Egemonye an intended loss equal to the aggregate limits of the purchased credit
cards. A reading of the transcript indicates that the judge found that Egemonye
was capable of and intended to use the cards to secure amounts at or virtually at
their aggregate limits. We review such a factual determination only for clear
error, United States v. Pavao, 948 F.2d 74, 77 (1st Cir.1991), reserving for
closer scrutiny a buried legal issue shortly to be described.
23
On the factual issue of intended use and capability, the government bears the
burden of proof because an increase in the offense level was sought, see United
States v. Sklar, 920 F.2d 107, 112 (1st Cir.1990), but the guideline itself
cautions that a reasonable estimate of loss will suffice. U.S.S.G. Sec. 2F1.1
comment. (n. 8). Egemonye begins by pointing out that he realized only about
53 percent of the aggregate card limits from the cards involved in the first three
transactions and nothing at all from the final bagful of cards since he was
apprehended almost immediately. He argues that to predict a 100 percent
recovery is simply unrealistic.
24
25
In sum, taking the issue purely as a factual one of intent and capability, we do
not think that on this record the use of the aggregate card limits as a measure of
intended and potential loss was clearly erroneous. Where there is good
evidence of actual intent and some prospect of success, we do not think that a
court needs to engage in more refined forecasts of just how successful the
scheme was likely to be. See United States v. Lorenzo, 995 F.2d 1448, 1460
(9th Cir.), cert. denied, --- U.S. ----, 114 S.Ct. 225, 126 L.Ed.2d 180 (1993).
The situation may be quite difficult where intent must be inferred solely from
the likely effects of the scheme. See United States v. Stern, 13 F.3d 489 (1st
Cir.1994).
26
28
Egemonye's counsel argues that section 2X1.1, and the discount it makes
available, apply in this case.
29
U.S.S.G. Sec. 2X1.1 is concerned with determining the offense level for an
attempt or conspiracy; and this it sets at three levels less than the offense level
for the substantive offense--unless the defendant (or his co-conspirators) have
completed all of the acts believed necessary for the substantive offense or were
"about to complete all such acts" when apprehended. For cases within the
"unless" clause--which the background comment says represent "most" cases-there is no such discount. Effectively, the guideline gives the defendant a threelevel discount if he is some distance from completing the substantive crime.
30
Read literally, section 2X1.1 is not relevant to the present case because 14 of
the 15 counts against Egemonye involved completed substantive offenses,
ranging from trafficking in unauthorized credit cards to producing false driver's
licenses, and the conspiracy thus embraced fully completed crimes. On the
other hand, the cross-reference to section 2X1.1 in section 2F1.1 arguably
connects the intended loss concept to the attempt guideline, and section 2X1.1
blurs the matter further with the following application note (comment. (n. 4)),
providing (in pertinent part):
31 certain cases, the participants may have completed.... all of the acts necessary for
In
the successful completion of part, but not all, of the intended offense. In such cases,
the offense level for the count (or group of closely related multiple counts) is
whichever of the following is greater: the offense level for the intended offense
minus 3 levels ... or the offense level for the part of the offense for which the
necessary acts were completed.... For example, where the intended offense was the
theft of $800,000 but the participants completed ... only the acts necessary to steal
$30,000, the offense level is the offense level for the theft of $800,000 minus 3
levels, or the offense level for the theft of $30,000, whichever is greater.
32
Interpreting these provisions is a matter of some difficulty, and the only cases
in point are in conflict. Compare United States v. Watkins, 994 F.2d 1192 (6th
Cir.1993) with United States v. Strozier, 981 F.2d 281 (7th Cir.1992). The
problem, in a nutshell, is that section 2X1.1 has on its face nothing to do with a
completed substantive offense or a conspiracy that has been carried to
completion. On the other hand, the notion of a discount could be extended from
the case of an incomplete offense to that of a completed offense where intended
harm is part of the calculus and the harm is only partly completed.
33
substantive offense has not been completed. E.g., United States v. Sung, 51
F.3d 92 (7th Cir.1995). The argument for a discount for inchoate crimes is
obvious; the defendant has started down the road toward the substantive crime
but has not gotten there yet and, whatever his intention, might still turn back
before crossing the line. By contrast, Egemonye did cross the line and commit
the substantive crime by acquiring the cards and making the false documents,
so the basic purpose of the section 2X1.1 discount has nothing to do with him.
34
35
36
Thus, the cross-references in section 2F1.1 are easily explained; they do invoke
the discount, or the possibility of a discount, where the underlying crime is
merely an attempt or conspiracy. Application note 4 in section 2X1.1 is less
easily reconciled; but we think the difference is that in the theft case, there is no
completed crime as to the larger amount but only (in substance) an attempt.
Here, by contrast, all 51 of the cards were the subject of completed crimes.
37
38
Both issues in this case are difficult and important. We are thus especially
indebted to counsel for the able briefing and argument presented on both sides.
The Sentencing Commission's attention will be drawn to the arguable lack of
clarity in the interplay between section 2F1.1 and section 2X1.1.
39
Affirmed.